It will be wrong to run away with the idea, or even to give the slightest impression, as some did at first, that the “minimum wage agreement” just announced by the social partners would take those on the minimum wage out of their difficult situation. It will do nothing of the sort.
Under the agreement, workers on the minimum wage are to get an increase of €416 within two years, less than half of what has been considered necessary for them to live a decent life. The move is therefore only one step forward in the drive to help those on a minimum wage meet basic needs. However, when the country is doing so well economically, it falls short of expectations.
Campaigners for a decent minimum wage have said the amount given is too low, a reaction undoubtedly based on knowledge of the situation on the ground. One reason given for holding back from giving a higher amount is the need to keep industrial competitiveness.
It has been argued that a sum higher than that agreed upon by the social partners within the Council for Economic and Social Development risked putting jobs on the line.
Even though Malta has one of the lowest rates of registered unemployed on record, the reason makes sense. Neither employers nor the unions would wish to see Malta losing its competitive edge as if this were to happen it could stall the rhythm of economic growth.
The agreement lays down that minimum wage earners who have been in employment for more than a year will get a €3 per week rise backdated to January. They will receive an additional €3 rise next year.
In 2018 and 2019, all workers, including minimum wage earners, will get a one-off rise of €1 per week for each year in addition to the regular cost-of-living wage adjustment.
Contrary to the impression that may have been given at first, the agreement does not touch the statutory minimum wage. The director general of the Malta Employers’ Association, Joseph Farrugia, clarified that one aim of the social partners was to minimise the period during which workers remained on the minimum wage. Another was to avoid distorting wage relativity between grades.
A Low Wage Commission is to be set up within the Council for Economic and Social Development to establish a mechanism that will review the situation. The commission has to submit its recommendations to the government every four years.
This means that those on the minimum wage, about 4,000, have still a very long way to go before they would be able to see a more tangible improvement in their earnings and, therefore, in their standard of living.
The anti-poverty campaigners, working under the umbrella Campaign for a Decent Minimum Wage, have called on the government to extend the weekly increase to those in their first year of employment. They feel that €8 per week over two years is too low and does not guarantee a fair and decent wage.
Unsurprisingly, the government tended to take much of the credit for the agreement. The Malta Council for Economic and Social Development now needs to go a step further and see to the long-needed revision of the cost-of-living wage adjustment mechanism (COLA). It is long overdue.